On December 3, 2024, Judge Amos Mazzant of the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction blocking enforcement of the Corporate Transparency Act (CTA) in Texas Top Cop Shop v. Garland et al. The CTA, effective January 1, 2024, requires most U.S. and foreign entities registered to do business in the U.S. to report their beneficial ownership information (BOI) to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) by January 1, 2025.

The Court found that the CTA imposes significant compliance costs on businesses without sufficient safeguards against data misuse. It also emphasized that corporate regulation has traditionally been a state function and ruled that the federal government had not demonstrated the CTA falls within Congress’s constitutional powers. As a result, the Court deemed the act likely unconstitutional.

What Does This Mean for Business Owners?

• For businesses that have already filed...